The Moderating Effect of Audit Quality on Audit Committee Characteristics-Earnings Management Practices Relationship

The current study aimed to investigate the relationship of Audit Committee (AC) Characteristics with Earnings Management (EM), and effect of external Audit Quality (AQ) on this relationship. Through employing a panel data of the listed non-financial firms in ASE for the years (2015-2021), findings showed that AC activity and AC expertise possess a significant and negative influence on the EM practices (measured by discretionary accruals levels). The findings indicate that these mechanisms restrict the managerial opportunistic behaviour through prevent the EM practices within the Jordanian context. While AC independence found to possess a significantly and positive influence on the EM practices. Regarding the moderating effect, outcomes showed that external AQ moderates the relationships of AC activity, AC expertise with EM practices. Outcomes of this study add to the ongoing debate regarding the role of AC characteristics in mitigating EM practices in the developing markets (Jordan) through taking into account the external AQ as a moderating variable. Outcomes of this research may be generalized on the similar developing economics, which have same contextual characteristics.